1 HAT203 Lecture 1 – Chapter 1 Gregoire Hospitality & Tourism Management COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969 WARNING This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (the Act). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Do not remove this notice. Systems Approach to a Foodservice Organization Chapter 1 Gregoire Foodservice Organizations2 1.1 1.2 1.3 1.4 1.5 Define systems terms such as interdependency, dynamic equilibrium, and equifinality Analyze foodservice operations using the foodservice systems model Identify inputs and outputs of the foodservice systems mode Discuss the transformation process Analyze ways in which factors in the environment impact the foodservice system Learning Objectives 1.6 1.7 1.8 Discuss steps in the strategic management process Describe foodservice operations in the foodservice industry Compare and contrast sustainability efforts in foodservice operations Learning Objectives (cont.) The Systems Concept A system is designed to accomplish an objective. Subsystems of a system have an established arrangement. Interrelationships exist among the elements. Flow of resources through a system is more important than basic elements. Organization objectives are more important than those of the subsystems.3 The Organization as a System • An open system has a number of unique characteristics: Interdependency of parts, leading to integration and synergy; Dynamic equilibrium; Equifinality; Permeable boundaries; Interface of systems and subsystems; Hierarchy of the system. • Interdependency is the reciprocal relationship of the parts of a system; each part mutually affects the performance of the others. • This characteristic emphasizes the importance of viewing the organization as a whole rather than the parts in isolation. • Interaction among units of an organization is implied by interdependency. • Units do not operate in a vacuum but continually relate with other units. • The result of effective interaction is integration, in which the parts of the system share objectives of the entire organization. • Integration leads to synergy, meaning that the units or parts of an organization working together may have greater impact than each of them operating separately. • Dynamic equilibrium, or steady state, is the continuous response and adaptation of a system to its internal and external environment, which includes all the conditions, circumstances, and influences affecting the system. • The term equifinality is applied to the organization as a system. • It means that a same or similar output could be achieved by using different inputs or by varying the transformation processes. • In other words, various alternatives may be used to attain similar results. • Permeability of boundaries is the characteristic of an open system that allows the system to be penetrated or affected by the changing external environment. • Boundaries define the limits of a system, and permeability allows the system to interact with the environment. • The area of interdependency between two subsystems or two systems is often referred to as the interface. • The overall organizational system has many interfaces with other systems such as suppliers, government agencies, community organizations, and unions. • Another characteristic of a system is hierarchy. • A system is composed of subsystems of lower order; the system is also part of a larger suprasystem. • In fact, the ultimate system is the universe.4 Characteristics of Open Systems Of Systems and Of the System Subsystems pendency Interde of Parts- Equilibrium Dynamic Equifinality Boundaries Permeable Interface Hierarchy Leads to Integration and Synergy A Foodservice Systems Model • The inputs of the foodservice system are the human and physical resources that are transformed to produce the output. • Traditionally, these resources have been referred to as men, materials, money, and minutes. • This traditional definition has been expanded by defining the following four types of resources: • Human: labor and skills • Materials: food and supplies • Facilities: space and equipment • Operational: money, time, utilities, and information • Input requirements are dependent upon and specified by the objectives and plans of the organization. • For example, the decision to open a full-service restaurant serving fine cuisine rather than a limited-menu operation with carryout service would have a major impact on type and skill of staff, food and supplies for production of menu items, capital investment, and type of foodservice facility and layout.5 Inputs of the Foodservice System Inputs of the Foodservice System • The outputs are the goods and services that result from transforming the inputs of the system; they express how objectives are achieved. • The primary output in the foodservice system is meals in proper quantity and quality. • In addition, customer and employee satisfaction and financial accountability are desired outcomes. • The objective of production of food is to satisfy the expectations, desires, and needs of customers, clients, or patients. • A customer at an office snack bar, for example, might be content with a grilled cheese sandwich and tomato soup; that evening at an upscale restaurant, however, the customer will have quite different expectations of the cuisine. • Customer satisfaction is closely related to the types and quality of food and services provided and to customer expectations. • For example, a college student, pleased with pizza on the luncheon menu of a college residence hall, would be unhappy if that same item were served at a special function of a social fraternity at a country club, even though in both instances the product may be of high quality. • Employee satisfaction is another important output of the foodservice system. • Management should be concerned about the satisfaction of their employees. • Managers also should be concerned about assisting employees in achieving and coordinating personal and organizational objectives. • Financial accountability is an output applicable to either a for-profit or not-for-profit foodservice organization. • A foodservice manager must control costs in relation to revenues regardless of the type of operation. Outputs of the Foodservice System Meal Quantity & Quality Customer & Employee Satisfaction Financial Accountability6 • Strategic thinking is a major component of a process termed strategic management. Managing strategically means developing and implementing strategies that assist an organization in maintaining a competitive advantage that sets it apart from others in the industry. • Strategic thinking has the following characteristics: – • Intent focused—has vision for where the organization is/should be going – • Comprehensive—views organization as part of larger system – • Opportunistic—takes advantage of unanticipated opportunities – • Long-term oriented—goes beyond here and now and looks into the future – • Builds on past and present—learns from past; recognizes constraints of present – • Hypothesis driven—evaluates creative ideas in a sequential process Characteristics of Strategic Thinking Long-Term Oriented Builds on Past & Present Hypothesis Driven Focused Intent Comprehensive Opportunistic Strategy Implementation Cost Leadership Focus Differentiation7 The Foodservice Industry Commercial Foodservice Onsite Foodservice Foodservice Operations • The commercial foodservice segment includes a broad range of restaurants (from limited-service to fine dining), lodging, food and beverage, recreation and sports, and convenience stores. • Limited-service, limited-menu restaurants (sometimes referred to as quick-service or fast-food) were designed to provide a limited number of food items to a customer in a relatively short period of time. • Often the customer orders food at a counter and pays for it before eating. • These restaurants are targeting working professionals and parents who want to have a meal served quickly at a low price. • Full-service restaurants provide waited table service for customers . • Guests are greeted and seated by a host/hostess and orders taken and delivered by waitstaff. • Payment occurs after the meal is completed and tip is typically given for the service provided by the waitstaff member. • Airport restaurants: Airlines are decreasing onboard foodservice by serving snacks such as pretzels and peanuts and cans of cold beverages and cups of hot coffee. • Each airport operates differently - operators either bid on their own or enter into a franchising arrangement with a major concession operator. • Restaurants rely on the airlines to attract people to their concourse. • Most airports require foodservice providers to cover all day, from early morning to late at night, and offer a takeout option primarily for airline crews. • Cruise Ship Dining: Cruise ships have a reputation for service of excellent food. • No limit is set on what you choose or how much you eat - the cost of the food is included in the price of the cruise. • Some ships have theme restaurants, such as Italian, Chinese, Japanese, or Southwestern, in addition to the main dining area. • Zoos: Foodservice is becoming a profit center in several zoos across the country, and operators are upgrading the food eaten by visitors. • Some zoos self-operate their restaurants and others use contract foodservice companies to provide the food options in their facilities. • Museums: Fine dining foodservice operations are becoming more prevalent in large museums. • Sports Events: Americans are spending more of their leisure time close to home visiting theme parks, sports events, and national parks. • Hot dogs, popcorn, peanuts in the shell, ice cream, soda, and beer have long been the items sold most often at ballparks. Today, however, fans can leave work and go straight to the ballpark to eat dinner that could include deli sandwiches, pizza, fajitas, frozen yogurt, and cheesecake. • Convenience Stores. Retail businesses with a primary emphasis placed on providing the public a convenient location to purchase quickly from a wide array of consumable products (predominantly food) and gasoline8 Commercial Foodservice Limited-Service, Limited-Menu Restaurants Full-Service Restaurants Airport Restaurants Cruise Ship Dining Zoos Museums Sports Events Convenience Stores • The style and ambiance of full-service restaurants varies greatly from casual to fine dining. • Casual dining restaurants are designed to attract middle-income individuals who enjoy dining out but do not want the formal atmosphere and high price found in a fine dining restaurant. • The atmosphere is casual, the mood relaxed, and the price midrange at these restaurants. • Fine dining restaurants, often referred to as “white tablecloth” restaurants, are characterized by a high level of attentive table service, expensive-looking furnishings and décor, and fine cuisine. • Staff members in these restaurants work to create a memorable dining experience that communicates elegance and attention to every need of the guest. • Fine dining restaurants also include: • Hotel and motel restaurants • Country club restaurants Full-Service Restaurants Casual Dining Full-Service Fine Dining Restaurants9 • A convenience store is a retail business with primary emphasis placed on providing the public a convenient location to purchase quickly from a wide array of consumable products (predominantly food) and gasoline. • Kiosk. Less than 800 square feet intended to provide additional revenue beyond gasoline sales. • Sells only tobacco, beverages, snacks, and confectioneries, no groceries; parking only at the gas pumps. • Typical customers are transients and locals stopping in to buy gasoline. • Mini. Usually 800 to 1,200 square feet in size, with emphasis on gasoline sales. • Grocery selection is usually sparse and the only food is prepared sandwiches; parking is often only at the pumps; usually open from 18 to 24 hours and customers usually only buy gas. • Limited selection. Range from 1,500 to 2,200 square feet and are becoming more numerous. • Gasoline and store sales are profitable - they have a broader product mix and grocery offering; gasoline buyers are normally the biggest customer base; striped parking and extended hours are common. • Traditional. About 2,400 to 2,500 square feet, offering a product mix that includes dairy, bakery, snack foods, beverages, tobacco, grocery, health and beauty aids, confectionery, as well as gasoline sales. • Other possible items are prepared foods to go, fresh or frozen meats, various products, and limited produce items; usually have 6 to 12 striped parking spaces and are open 24 hours a day. • Expanded. The number of stores that have 2,800 to 3,600 square feet is growing fast. • Stores have more shelving for grocery products and more room for fast-food operations and seating; parking is important, with most having about 10 to 20 spaces; hours are extended. • Hyper. These are very large stores, 4,000 to 5,000 square feet, and usually offer many products and services arranged in departments. • For example, such stores may offer a bakery, a sit-down restaurant area, and a pharmacy; many sell gas; the number of parking spaces is substantial and hours are extended. Convenience Stores Convenience Stores • The onsite foodservice segment includes hospitals; schools, colleges, and universities; correctional facilities; and military operations. • These foodservice operations provide meals primarily for those directly involved with the facility such as patients, students, prisoners, and employees; some visitors to these facilities also may be served. • Hospitals. Hospital foodservice operations provide food for both inpatients and outpatients and their family and friends. • Managed care, providing care under a fixed budget, has put pressure on hospitals to control costs - many hospital foodservice operators are changing and expanding the retail options they provide to staff and visitors. • Patient census counts are declining and foodservice managers are streamlining menus, staffing only one or two shifts, and relying on more convenience foods. • Schools. The National School Lunch Program (NSLP) is a federally assisted meal program operating in more than 101,000 public and nonprofit private schools and residential child care institutions. • The NSLP provides nutritionally balanced, low-cost, or free lunches to more than 31 million children each school day. • Colleges and Universities. College and university foodservice operations provide a variety of food options to students at more than 3,700 colleges and universities across the United States. • Foodservice operations in this segment have grown from the traditional straight-line cafeteria in each dormitory to multiple retail venues including food courts, deli, kiosks, and convenience stores. • Traditional board plans often are being replaced with declining-balance food accounts, which allow students to pay for only those foods eaten each day. • Child Care. Increasing numbers of American children are enrolled in child care outside their homes as more mothers are working. • The position of the Academy of Nutrition and Dietetics (formerly the American Dietetic Association, ADA) is that all child care programs should achieve recommended benchmarks for meeting children’s nutrition and nutrition education needs in a safe, sanitary, and supportive environment that promotes healthy growth and development.10 • Senior Care. Many older people do not want to lose their independence by going to a nursing home, but they need assistance in preparing meals. • Military. Military foodservice operations include dining hall and food court meal service for troops, hospital feeding for patients and employees, club dining for commissioned and noncommissioned officers, and mobile foodservice units for troops deployed to offbase locations. • The Army & Air Force Exchange Service is adding more national chains, such as Taco Bell and Manhattan Bagel Co., to food courts on military bases. • Food is also being sold in on-base convenience stores or gas stations. • Correctional Facilities. Until 1960, prison foodservice offered only the basics; during this time, prison foodservice directors banded together to form the American Correctional Food Service Association (ACFSA). • A major goal of ACFSA was to improve foodservice and reduce food riots started by prisoners unhappy with the quality of food served to them. • Today, many facilities have self-serve salad, pasta, and dessert bars and serve favorites like pizza, chicken nuggets, and homemade baked goods. • Foods served to inmates must meet standard dietary guidelines, and all menus must be approved by registered dietitians and are evaluated quarterly. • Employee Feeding. Employee feeding has undergone many changes because of the rising cost of labor and the decrease in corporate subsidies. • Managers are realizing that these operations must be self-supporting and revenue generating. • Menus have been updated and facilities renovated to make the foodservice more like a commercial restaurant operation. • Instead of a straight-line cafeteria with an employee serving the food, customers serve themselves from individually themed stations, such as salad, soup, pasta, grill, deli, desserts, and beverages. Onsite Foodservice Hospitals Schools Colleges & Universities Child Care Senior Care Military Correctional Facilities Employee Feeding • The purpose of the Nutrition Services Program for Older Americans, as authorized by Title III of the Older Americans Act, is to provide nutritious, low-cost meals to homebound persons and congregate meals in senior centers. • Many organizations also sponsor home-delivered meals, including the Visiting Nurse Service and the National Association of Meal Programs, which is subsidized partially by the USDA and the United Way. • Many housing and meal options exist for seniors - the options differ based on the amount of care given: • Independent living. For people who can take care of themselves in their own homes or apartments, a retirement community, or independent living apartment. • Congregate care. A community environment with one or more meals a day served in a community dining room. • Many services are provided, such as transportation, a pool, convenience store, bank, barber/beauty shop, laundry, housekeeping, and security. • Assisted living. Apartment-style accommodations where assistance with daily living activities is provided. • Fills the gap between independent living and nursing home care. • Services include meals, housekeeping, medication assistance, laundry, and regular check-ins by staff. • Intermediate care. Nursing home care for residents needing assistance with activities but not significant nursing requirements. • Skilled nursing. Traditional state-licensed nursing facilities that provide 24-hour medical nursing care for people with serious illnesses or disabilities. • Care provided by registered nurses, licensed practical nurses, and certified nurse aides.11 Senior Care Intermediate Care Skilled Nursing Congregate Care Independent Living Assisted Living • Customers are spending more than half of their food dollars on food prepared outside the home - foodservice operators who deliver high-quality, ready-to-eat foods at reasonable prices will succeed. • The foodservice industry includes a variety of operating practices, including self-operation, partnering, contracting, franchising, and multidepartment management. • Self-Operation. Self-operation means that the foodservice operation is managed by an employee of the company in which that foodservice operation is located. • This manager has full responsibility and authority for all functions within the department and reports to an administrator employed by this same company. • Partnering. Partnering is a mutual commitment by two parties on how they will interact during a contract with the primary objective of improving performance through communications. • It is primarily a relationship of teamwork, cooperation, and good faith performance through communications. • Contracting. A contract is defined as an agreement between two or more persons to do or not to do something. • A partnership between the two is necessary to make the contract work the focus must be long term. • There are many companies who will contract with an organization to run the foodservice operations in that organization. • The largest contracting companies are Compass Group, ARAMARK Corporation, and Sodexho, Inc. • Franchising. Franchising is defined as the right granted to an individual or group to market a company’s concepts. The International Franchise Association (IFA) suggests that the biggest advantage of becoming a franchisee is that it solves the two biggest expansion problems: people and money. • A franchisee is a person who is granted a franchise • A franchisor is a person who grants a franchise. • Multidepartment, Multisite Management. Multidepartment management is coming back into the picture for many foodservice operations. • Reasons for becoming a multidepartment manager: professional development, value to the employer, a higher position within the organization, job security and simple survival. • Many foodservice managers are responsible for multiple sites as well. Contracting Franchising Multidepartment Management Foodservice Industry Operating Practices Self-Operation Partnering Operating Practices12 • Sustainability, the ability to meet the needs of today without compromising the ability of future generations to meet their needs, is becoming increasingly important to foodservice operations. • According to ADA, a sustainable food system is one that is: • Ecologically sound (inputs used in ways that conserve, regenerate, or enhance natural resources); • Socially acceptable (resources are distributed equitably; people working in the food system are treated justly; and foods that are produced benefit human health, are culturally acceptable, and economically and geographically available); and • Economically viable (provides livelihood that supports families; economic control of production, distribution, and access equally shared). Sustainability Ecologically Sound Socially Acceptable Economically Viable Sustainability Efforts in Foodservice Operations .